In the United Kingdom, the Advance corporation tax (ACT) was the scheme under which companies made an advance payment of tax when they distributed dividend payments to shareholders. The principle is similar to the way that interest earned on bank deposits in the UK normally has basic rate tax deducted by the bank before being paid to the account holder.
In general this payment meant that the recipients of the dividend were considered to have already paid basic rate tax on their dividend income. Certain recipients, including pension funds, who would not otherwise have paid income tax on the dividend income were entitled to claim back this (or later a lesser) amount from the treasury.
The amount of ACT paid by a company could also be offset against the company's profits reducing its final corporation tax bill.
Read more about Advance Corporation Tax: History
Famous quotes containing the words corporation tax, advance, corporation and/or tax:
“What I am anxious to do is to get the best bill possible with the least amount of friction.... I wish to avoid [splitting our party]. I shall do all in my power to retain the corporation tax as it is now and also force a reduction of the [tariff] schedules. It is only when all other efforts fail that I’ll resort to headlines and force the people into this fight.”
—William Howard Taft (1857–1930)
“Those thoughts are truth which guide us to beneficial interaction with sensible particulars as they occur, whether they copy these in advance or not.”
—William James (1842–1910)
“It is truly enough said that a corporation has no conscience; but a corporation of conscientious men is a corporation with a conscience.”
—Henry David Thoreau (1817–1862)
“As a Tax-Paying Citizen of the United States I am entitled to a voice in Governmental affairs.... Having paid this unlawful Tax under written Protest for forty years, I am entitled to receive from the Treasury of “Uncle Sam” the full amount of both Principal and Interest.”
—Susan Pecker Fowler (1823–1911)